The combination of solar power and battery storage edged out natural gas, which is the go-to technology for peaking plants

Solar photovoltaic panels in the desert near Phoenix may seem unremarkable. After all, the southwestern United States offers some of the best solar conditions in North America.

But a recently announced 65 megawatt (MW) project is making news by coupling solar PV with battery energy storage, a first for utility Arizona Public Service, which solicited proposals in 2017 for generation sources to provide electricity during peak demand hours.

Perhaps more noteworthy is the fact that the solar-plus-storage bid beat out other generation sources, including multiple proposals for natural gas plants. (The utility has an agreement with an existing natural gas-fired plant for a total of 570 MW for the summers of 2020 through 2026.)

Storage is something of a “Swiss Army knife” for the grid.

Natural gas-fired combustion turbines are the go-to technology that utilities have long relied on to meet peak demand.

Similar to a jet engine, a gas combustion turbine can ramp up to full power within minutes to meet demand in places from Phoenix to Pittsburgh when air conditioners are cranked up on the hottest summer days.

Solar PV, on the other hand, has been considered by many in the industry to be an intermittent generating resource at best. At night and on cloudy days, the familiar argument goes, there’s no power.

But a dramatic drop in the cost of battery energy storage, driven in large part by an increase in lithium-ion battery production to satisfy growing demand for electric vehicles, is silencing some of that argument.

The cost of lithium-ion batteries has dropped “about 90 percent” in recent years, says Garrett Fitzgerald, manager in the Mobility Transformation Project for the Colorado-based Rocky Mountain Institute. Prices that had been as high as $1,000 a kilowatt-hour (kWh) are now “sub $200/kWh,” and falling.

At the same time, storage is gaining a reputation for versatility. Utilities are learning that they can use a single storage project to do many different things. It’s something of a “Swiss Army knife” for the grid, Fitzgerald says, noting that storage is capable of providing services like frequency regulation, which maintains the grid’s electric frequency on a second-to-second basis, and reactive power support, which supports the voltage that must be controlled for grid reliability.

EV demand and a reputation for versatility are two factors that are working in favor of utility-scale energy storage, Fitzgerald says. Market rules among grid operators like PJM Interconnection in the eastern United States also are enabling the deployment of still more storage projects.

The Energy Department’s Energy Information Administration says PJM has the most utility-scale battery storage capacity in both power and energy terms. That’s because in 2012, PJM’s ancillary services market introduced a frequency regulation product designed to pay generation resources that can quickly adjust power output.

Since then, battery storage in PJM has grown from 38 MW to 274 MW in 2016. More than 90 percent of that power helps with frequency regulation. Battery storage with electronic controls can respond faster than sources that rely on inertia from thermal power plants that provide “spinning reserves,” Fitzgerald says.

"We are not quite there yet, but as costs decline further, storage will be transformative for the power industry."
—Judy Chang, Brattle

In a recent move, federal power regulators in mid-February directed grid operators across the United States to remove market barriers that might block storage deployment. Economists at the Brattle Group have said in a study that the policy initiatives add up to a possible U.S. market for energy storage capable of delivering as much as 50 gigawatts of power in the United States within the next decade.

"There are important, but narrow, applications in which storage is already cost effective today," says Judy Chang, a Brattle principal and co-author of the study. "We are not quite there yet, but as costs decline further, storage will be transformative for the power industry."

The Arizona project developers tailored their bid around peaking capacity only, and no ancillary services were factored in, says Scott Rackey, who leads the PV plus storage development effort for FirstSolar, which will build, own, and operate the project.

The 65 MW will energize a 50 MW bank of lithium-ion batteries to provide energy between 3 PM and 8 PM as demand peaks. The batteries have a nameplate capacity of 135 MWh, and will be capable of delivering energy for at least three hours. Arizona Public Service signed a 15-year power-purchase agreement with First Solar for power from the array. Other terms were not disclosed.

Photo: Arizona Public Service

This battery storage facility is operated by Arizona Public Service.

When it’s operational at the end of 2021, the 65 MW solar PV array will be able to deliver energy to the grid while the sun is still high in the sky, Rackey says. As evening approaches, the batteries will discharge their energy and continue to provide power for peak demand.

The solar PV array is oversized relative to the storage battery to ensure that it is able to recharge the battery even under less than ideal solar conditions. “This increases our chances of fully charging the battery,” Rackey says.

The facility will be built near the existing APS Redhawk Power Plant in western Maricopa County outside of Phoenix. The facility will be near the Palo Verde Nuclear Generating Station which, at almost 4,000 MW, is the largest such nuclear facility in the United States.

The FirstSolar project will add to the three grid-scale batteries currently on APS’s system. Over the next 15 years, the utility says it plans to adopt more than 500 MW of additional battery storage.

For example, instead of rebuilding about 32 kilometers of transmission and distribution poles and wires, APS is installing two battery storage systems in a rural part of the state. The investment makes it one of the first electricity companies in the nation to use batteries in place of traditional infrastructure. The two 4 MWh Advancion batteries are made by Fluence. Construction on the project was set to begin in fall 2017.

Vendors for the solar-plus-energy project have yet to be chosen, Rackey says. The most “bankable” vendors today are in Asia and include Samsung and LG, with some Chinese suppliers also in the running. That could change in the coming months, however, especially if prices continue to drop. “We did not anticipate,” Rackey says, that battery energy storage’s viability would come “quite so quickly.”